IRS Levied My PayPal or Stripe Account – What to Do Next
Yes, the IRS Can Levy Your Payment Processor—and They’re Doing It More Often
If the IRS recently seized funds from your PayPal, Stripe, Square, or Venmo Business account, you’re likely shocked and wondering what happened—and what to do.
These levies are becoming more common as the IRS aggressively targets self-employed individuals, online sellers, gig workers, and small business owners who rely on third-party payment processors.
In this blog, we explain how these levies work, what to do immediately, and how to protect your cash flow going forward.
How the IRS Can Levy a PayPal or Stripe Account
Under IRC §6331, the IRS has broad authority to levy any third-party holding money on your behalf, including:
- Digital wallets (PayPal, Venmo Business, etc.)
- Payment processors (Stripe, Square, etc.)
- Merchant accounts
The IRS sends a Form 668–A to the payment platform, and they are legally required to freeze and remit the funds—just like a traditional bank levy.
Related: IRS Bank Account Levy in California – What to Do When Your Funds Are Frozen
What Triggers a Digital Payment Levy?
Digital account levies are often issued when:
- You owe federal tax debt
- You ignored prior notices (CP504, LT11)
- The IRS knows or suspects you earn income through online platforms
- Your bank accounts have already been levied or protected
Related: IRS Notice of Intent to Levy – Urgent Steps to Take
What to Do Immediately After a Levy
Step 1: Log into Your PayPal or Stripe Account
Check:
- Balance history and frozen funds
- Notifications from the payment platform
- IRS correspondence uploaded to your account (some platforms share it digitally)
Step 2: Call the IRS or Hire Representation
The IRS will not release the funds unless you:
- Enter a formal Installment Agreement
- Submit an Offer in Compromise
- Qualify for Currently Not Collectible
- Demonstrate hardship or IRS error
Related: IRS Seized My Bank Account – Can I Get the Money Back?
Step 3: Request a Manual Levy Release
If the seizure created serious business interruption or hardship (e.g., missed payroll, withheld client funds), the IRS may release the levy.
You’ll need:
- IRS Form 433-A or 433-B
- Business cash flow statements
- Written explanation and supporting documents
Can You Recover the Funds?
Yes—if you act before the funds are transferred (or in some cases, shortly after). Otherwise, they are applied to your tax balance, and you’ll need to resolve the remaining debt.
How to Prevent Future Levies on Digital Accounts
- Resolve the tax debt through settlement or payment
- Bring all returns current
- Set up a payment plan with direct debit
- Avoid using personal platforms (e.g., Venmo personal) for business transactions
We Help Orange County Business Owners Stop IRS Levies on Payment Platforms
At Boulanger CPA and Consulting PC, we:
- Respond to IRS levies on PayPal, Stripe, Square, and more
- File for levy release and hardship relief
- Negotiate resolutions to stop future levies
- Help small business owners protect their income and operations
📞 Call (657) 218-5700 or request urgent help at www.orangecounty.cpa
Frequently Asked Questions
Can the IRS really take money from PayPal or Stripe?
Yes. These platforms are treated just like banks under IRS levy law.
Will they notify me first?
The IRS must send a Final Notice of Intent to Levy—but if you didn’t respond, they can proceed.
What if the money belongs to my client?
You may be able to file a third-party claim—but you’ll need documentation and fast legal action.
Can this happen again?
Yes—unless you enter a resolution, the IRS can levy multiple times.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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